Start-ups wary of policy restrictions

The government’s proposed start-up policy might result in unnecessary policing and restrictions on the sector, fear some. More than a policy on start-ups, the need is to free these from red tape, said Sandeep Aggarwal, founder of ShopClues and chief executive of Droom. The government, he said, should work on streamlining the taxation rules.

“There is no tax advantage of operating in India,” he said, while noting countries such as Singapore have turned into start-up hubs because of the attractive tax regime there.

Another top executive at an online company said to set up an e-commerce venture in India is time consuming and cumbersome, with clearances needed from various departments. In the US, this takes a couple of hours.

Smaller e-commerce companies also fear the government’s move on further regulations would only stifle their growth. A group of representatives of small and medium-sized e-commerce companies have sought a review of the government’s plan to define e-commerce and the business models which operate under it. Led by E-Commerce Coalition secretary Aamir Jariwala, they filed a representation to the department of industrial policy and promotion (DIPP) last week.

The coalition said it apprehended that any definition for the existing e-commerce marketplace models might lead to escalating the level of regulation in the sector. It stressed that the government only needed to liberalise the rules on the sector, allowing foreign investment in inventory-led companies, too.

However, business chambers such as the Confederation of Indian Industry (CII) are supportive of a government policy. Such a policy would help start-ups secure funds in an easier way, help them formulate an exit strategy, and have policies around easy liquidation of business, which have all been demands of the sector, they believe.

“A start-up policy is most definitely required, as it will help in creating a favourable system. There should be ease of doing business for start-ups and getting approvals for legitimate start-ups should be easier and faster; a single-window clearance system would greatly help,” said Viresh Oberoi, chairman of the CII’s national e-commerce committee. This should be an umbrella policy, targeted at all sectors, from manufacturing to e-commerce, Oberoi said. ”The basic idea is to make the process of setting up start-ups simpler and transparent.”

In his Independence Day speech, the prime minster had announced a ‘Start-up India, Stand-up India’ campaign, to promote bank financing for start-ups and offer these incentives to boost entrepreneurship and job creation. The draft policy in the making is drawing inputs from some knows names, such as SoftBank President Nikesh Arora, Snapdeal CEO Kunal Bahl, Oyo Rooms’ founder Ritesh Agarwal and former Infosys director Mohandas Pai.